Shafted! Why are Homeowners Still Left to Struggle Against Big Banks Alone?

Photo Credit: woodleywonderworks on Flickr

Across the country, states are diverting foreclosure settlement funds to plug budget holes.

May 18, 2012

It was with great fanfare that the Obama administration, alongside nearly every state’s attorney general, announced in February that a $25 billion accord had been reached with the nation’s five biggest banks, settling charges that the banks engaged in widespread foreclosure fraud. Those billions were intended to provide relief to struggling homeowners, using the banks’ own money to help the victims of Wall Street malfeasance.

“These banks will put billions of dollars towards relief for families across the nation,” President Obama said. “They’ll provide refinancing for borrowers that are stuck in high interest rate mortgages. They’ll reduce loans for families who owe more on their homes than they’re worth. “

However, more than a dozen states across the country are doing their best to undermine the settlement by diverting the funds to other areas of their budgets. Arizona recently became the latest state to do so, taking $50 million meant to aid homeowners and instead plowing it into the state’s general fund (after scrapping an earlier plan to use the money to pay for prison construction).  READ MORE

Homeowners deserve protections afforded businesses

Earl Blumenauer

Friday, February 17, 2012

It's a curious and unfair system that homeowners face, with those in debt expected to meet the original terms of their mortgage loan even as we're seeing a cavalcade of misdeeds, shortcuts and in some cases outright fraud by their lenders. Nowhere is this pattern clearer than in Thursday's report from San Francisco auditors that 84 percent of foreclosures examined contained at least one violation of the law by the foreclosing party.

The report is only the latest in a series of incidents involving bad actors in the foreclosure crisis. Last year, I called for a moratorium on home foreclosures after Bank of America, JP Morgan Chase and Wells Fargo signed affidavits initiating foreclosure against borrowers without verifying the information they contained. In fact, problems have been so rampant that banks now require many buyers of foreclosed homes to sign contracts absolving the bank of liability should irregularities appear with the original foreclosure.

In light of these negligent practices, the $26 billion settlement last week between the U.S. Department of Justice, state attorneys general and the major banks raises as many questions as answers. For instance: If a house is illegally foreclosed upon and subsequently sold by the bank, who owns the home? The new buyer or the original owner? Untangling this mess might require new consumer protections, not just a payout from the banks accused of wrongdoing.

The best way to prevent foreclosure problems, however, has always been to prevent foreclosures in the first place. Offering families facing foreclosure the same bankruptcy protections enjoyed by business speculators is one place to start.

As it stands today, a single family that buys a home in a housing development is treated differently in bankruptcy court than a businessman who bought 10 units in the same project. If and when the housing bubble bursts, the underwater speculator is able to seek bankruptcy relief on all 10 units, while the owner of the single home is left out in the cold. There is no good reason that homeowners should face this discrimination in bankruptcy or be treated differently than commercial interests. If it's good enough for business, it should be good enough for homeowners.   READ MORE

Note: For lots more from reliable sources on the impacts of the financial crisis on homeowners, click here.

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The article is incorrect. Homesteads are exempt from $25000 in Louisiana to value of home in Florida.

Here is a not-up-to date listing of exemptions: 

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J&J Said to Agree to Pay $1 Billion in Risperdal Marketing Probe

January 18, 2012, 9:09 AM EST

By Margaret Cronin Fisk, Jef Feeley and David Voreacos

Jan. 6 (Bloomberg) -- Johnson & Johnson will pay more than $1 billion to the U.S. and most states to resolve a civil investigation into marketing of the antipsychotic Risperdal, according to people familiar with the matter.

J&J, the world’s largest health products company, reached an agreement last week with the U.S. attorney in Philadelphia, according to the people, who weren’t authorized to speak about the matter. Negotiations over a possible criminal plea are still under way, they said.

The U.S. government has been investigating Risperdal sales practices since 2004, including allegations the company marketed the drug for unapproved uses, J&J has said in Securities and Exchange Commission filings. The company said it has been in negotiations with the U.S. to settle the investigation.

 READ MORE

David Dayen: Mortgage Settlement Agreement Is Only An Agreement In Principle

 By Susie Madrak


David Dayen, who's done more than anyone to keep this mortgage settlement deal in the public eye and under the microscope, is horrified to discover that the deal announced this week doesn't actually exist in any tangible form. He calls it "a real failing on the part of the activists, who jumped at the opportunity to pontificate on the deal, without actually seeing the term sheet, which we know now in fact does not exist:"

Well, so much for my first “making chicken salad” option. We are more than 24 hours removed from the foreclosure fraud settlement and the terms have, shockingly, not been released. In fact, American Bankerreports that the terms will not be released before the filing of the settlement in federal court, because a document with actual terms does not yet exist.

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public. The website created for the national settlement lists the document as “coming soon.”

That’s because a fully authorized, legally binding deal has not been inked yet.
The implication of this is hard to say. Spokespersons for both the Iowa attorney general’s office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document’s non-final status, saying that the terms were already fixed.

“Once the documents are finalized, they’ll be posted to nationalmortgagesettlement.com,” the representative said in an email to American Banker.

Incidentally, why is nationalmortgagesettlement.com a dot-com, not a dot-gov? What’s going on here?This is incredible. The Administration, the AGs, everyone involved in this made a big show of an agreement reached on foreclosure fraud. But there is no piece of paper with the agreement on it. There’s no term sheet. There are just agreements in principle.There’s a HUGE difference between an agreement in principle and the actual terms.  READ MORE


Mortgage settlement agreement search

A Victory for the Public on Foreclosures?

A foreclosed home in Miami, Florida.

POSTED: January 28, 12:07 PM ET 

So there was big news yesterday on the foreclosure settlement front. We still have to wait and see what the final deal looks like, but there are reports out that the long-awaited settlement is a far, far better deal for the public than expected. If these reports are true, it looks like New York Attorney General Eric Schneiderman and California AG Kamala Harris have scored an enormous victory in narrowing the scope of the settlement to the point where it really only covers robosigning abuses.

According to reports (like this one in the Huffington Post), the deal will not include:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

If that is true, and all of those things are out of the deal, and the banks are still exposed to liability not only for all of those things, but also for the broad range of offenses related to securitization, then $25 billion, dare I say it, might not even be a completely sucky number. It's far less than the real liability, but it's a much bigger sum than I ever thought would be negotiated just for robosigning.

READ MORE